In this Aug. 31, 2016 photo, Philippine President Rodrigo Duterte salutes the flag-draped coffins of 15 Philippine Army soldiers killed by Abu Sayyaf militants in fierce fighting two days earlier on the restive southern island of Jolo. The attack dealt the government its largest single-day combat loss under President Duterte, who ordered the militants to be crushed for their brutality.

Cagayan de Oro, Philippines — Military roadblocks are not common in the Philippines. But there are two of them now on the road from the airport to this scruffy agricultural and industrial hub on the island of Mindanao.

They are the first signs a visitor sees of President Rodrigo Duterte’s new campaign to stamp out an Islamist rebellion that has smoldered here for decades, deterring investors and dampening economic growth.

Mr. Duterte is bringing to the fight the same brutal determination he has shown in his battle against illegal drug use – a campaign that has killed around 3,500 people in the past four months.

Abu Sayyaf is best known overseas for kidnapping and beheading foreign tourists – most recently Canadian national Robert Hall in April. The group’s political cause, independence for predominantly Muslim parts of Mindanao, has been overshadowed by its frequent resort to gangsterism and extortion.

But Abu Sayyaf, a US-listed terror group, has proved resilient in the past, and the Philippines president may be about to lose a major ally in his fight against them if his recent threats to expel US military advisers are to be believed.

'People are leaving....'

Last month, Duterte declared an official "state of lawlessness" on Mindanao, clearing the way for the Army and police to work together against the rebels, thought to number around 400. Earlier, in stepped up operations, the Army killed 22 rebels and lost 12 soldiers; Abu Sayyaf retaliated by threatening “jihad" and bombing a night market in the provincial capital of Davao, killing 14 bystanders.

Residents of this run-down port city generally seem to support Duterte’s declaration of stepped-up war against Abu Sayyaf, hoping its eventual success could lead to greater prosperity.

“We hope that with the unity of the police and the support of our military, we can go together and solve the problem of our country,” says Lenilyn Deloy, a self-employed manicurist living off a trickle of customers who find her in a public park.

More than 120,000 people have died over the past 50 years in fighting with Abu Sayyaf and other Muslim rebel groups on Mindanao, a lush tropical island the size of Kentucky. The persistent violence has had dire economic effects: 40 percent of people living on Mindanao are classed as poor – the highest rate in the country – according to the Asian Development Bank.

Mindanao lags behind the rest of the country in roads, railways, and industry. The threat of violence “discourages investment, drains government resources, and poses a continuing risk of connections to international terrorism,” the US government’s poverty relief agency USAID says in a recent report.

“People are leaving [Mindanao] simply because the economy is bad,” says Rhona Canoy, president of a private school and scion of a prominent political family in Cagayan de Oro.

Yet the region is potentially rich. “If the conflict ends, the islands of the Sulu Sea are ripe for tourism,” forecasts Jonathan Ravelas, chief market strategist with Banco de Oro UniBank in Manila. “Agriculture will definitely stand out as the farmers want to raise crops, and with government aid would have a market for their goods.”

“It’s always been the dream of Mindanao to have a situation of peace so that development efforts can come in,” says Cagayan de Oro archbishop Antonio Ledesma. “I think the investors are waiting to come here provided there’s a peace negotiation that is stabilized.”

Investor queries about Mindanao surged around the time of Duterte’s inauguration in June, Philippines News Agency reported, in an apparent sign of hope for improvements to come. The new president served as mayor of Davao for 22 years.

Sowing confusion

While ordering thousands of Filipino troops to root Abu Sayyaf fighters out of their strongholds on islands in the Sulu Sea, off the coast of Mindanao, Duterte has sown confusion about his intentions with threats to expel US military advisers helping government forces.

US officials say nothing has changed for the 50 to 100 American personnel normally on Mindanao at any one time to help investigate kidnapping threats and do forensic investigations.

“Over the last two months, we have been consulting with our Filipino partners at senior levels on ways we could increase our assistance to support the new administration's counter-terrorism efforts,” embassy spokesperson Molly Koscina says. “We will … tailor our assistance based on the Duterte administration’s policies and priorities.”

Duterte pledged during his election campaign to open negotiations with two sporadically violent, Mindanao-based Muslim rebel groups, the Moro Islamic Liberation Front and the Moro National Liberation Front, about autonomy. He is treating Abu Sayyaf, however, simply as a bandit gang.

That may or may not work, say analysts. “A suppressive element is probably necessary, but it needs to be embedded in a broader political solution,” says Tim Johnston, Asia program director with the International Crisis Group think tank. “The two are not incompatible; they are complementary in many ways.”

Abu Sayyaf has “waxed and waned” over its 25-year history, says Jay Batongbacal, associate professor of law at the University of the Philippines in Manila. But the group does not find it hard to recruit unemployed young Muslim men who see no future.

“It is really rooted in the problems of the economic and cultural situation in that part of the Philippines,” Prof. Batongbacal adds. “That’s why it is really difficult to extinguish.”